Deforestation as an indicator of environmental degradation: Analysis of five European countries

This study explores the validity of the Environmental Kuznets Curve (EKC) hypothesis for deforestation in France, Germany, Greece, Portugal and Turkey. The autoregressive distributed lag bounds testing approach was applied on time-series data over the period 1974-2013. Deforestation is considered an indicator of environmental degradation for its relevance as a global environmental concern, being agriculture expansion one of its main causes. Nonetheless, Europe has achieved an expansion of its forest region through policies that have promoted the use of technology in the agricultural sector. The results of long-run coefficients suggest an inverted U-shaped relationship between deforestation and Gross Domestic Product (GDP) per capita in France, Germany, Portugal and Turkey, which supports the EKC hypothesis. Based on the empirical results, we conclude that an increment in agricultural exports does not contribute to an increment in deforestation. Recommendations regarding public policies derive from the analysis of the Granger causality test. For example, deforestation reduction and investment on deforestation reduction will not hurt economic growth in all countries except Greece.